Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1887-07-30
THE PACIFIC RAILROADS.
A Retrospective View of their Opera
tions, History, Etc.
IS F. Alta July 2Sth


ions, History, Etc.
Is. F. Alta July 2sth.l
The Federal inquiry now being made |
will, as we have said, rank with the search |
ing Parliamentary Investigations by Com |
mission, in which are preserved the indus |
trial and business history of Great Britain !
for the long period between the battle of
Waterloo end the final acceptance of free
trade in 1916. That is story that stretches
from Pitt TO Peel, and the details which
make it up we're but little noted by con-
temporary historians and politicians.
In the case of the Pacific roads the poll
ticians have intruded from the friendly and
the unfriendly side, but, as rule, their APP
pearance has been that of self-interested
partisans, and too often Of men who were
improperly influenced.
The result has been that one side of re-
markable history has secured but little
public attention. while the other side has
supplied the material for what we have
called the mythology of scandal.
Now the unlnspired history is, crystaliz-
ing in the hands of the Commission, and it
will present features instructive and ad-
monitOry to business men the world over
The press of California. of late years, has
made much sport of our capitalists who
were offered chance to own the Central
Pacific road, and they have seemed to have
missed an enviabie investment. But the
event may prove that men like Michael
Reese had foresight not altogether to be
decried. The difficulties of construction
and operation of railroad over the noun
tains and through the deserts to Ogden,
which engineers said were insurmountable,
operated as powerful check to the cupid
ity or enterprise of capitalists. This check
was net offset by the great area of the land
grant, when its character was measured
against acreage, for it was and largely re-
mains the most forbidding desert and
mountain land on the continent, though
the lively imagination of the East has seen
in it always the same characteristics as
were in the rich prairie lands of Iowa, Hi
nois and Nebraska, which were given as
subsidies to railroad corporations. The
desert on which men died of thirst in the
days Of overland wagon trains has not been
redeemed and made to blossom by the transit
of railroad trains, and it was undoubtedly
due to their knowledge of it, acquired by
experience, that California capitalists re-
fused the chance to invest in the stock of
railroad that must run for so many hun
dreds of miles through a country abso-
lutely unpromising of local traffic. A land
grant road in Iowa or Illinois bad the use
of its acreage as a basis of credit for the
PAoSIu5 VI as JULIUS Jul the utility Oh Inc
subsidy did not end with its use as the
foundation of a mortgage. 1t was sold TO
cultivators and began to produce tonnage,
and upon it was settled a population that
Travelled in passenger cars, and so the de-
yelopment of the country, thrended upon
the land grant roads and promoted by
them, supplied the means of their prosper
ity. In ibis way the products of Iowa,
drawn from the SOIL pay to the railways
ofthat State $50, 000,0 900 annually in freights.
If the lands given to the Central Pacific
in Utah and Nevada alone had been capa-
BILE of settlement and production on an
equal scale, they would by this time be
producing tonnage of a volume that would
yield to that road S70000,000 year in
freights. But they are located ON mount
aims and desert, and perhaps after centuries
have gone by will not have been mate
rally changed. but will be as insusceptible
of supporting a population as they were
when the first construction gangs dug their
dusty way across the thirsty desert. If the
foreken of California capitalists took in all
these considerations, we must Withdraw
the impeachment of their craft which has
SO long been common in this State.
That impeachment was based upon the
fact that when the stock of the Central Pa
cific was put on sale in this city, and its
market place was made attractive by
brass band and blazing handbills, like the
front OF dime museum, after six weeks
earnest effort only one man bought, and he
took ten shares at ten cents a share But
why should the stock sell? Money at that
time was worth two and three per cent.
month, and why should it have been in
vested in two streaks of rust and right of
way across desert? The personal liability
clause in our State laws made a stock
hnI in lsahl a g.. I
rata of its debts, aud this one promised
more debt than dividend. After the road
had been in operation three years its stock
was sold at Thirteen cents share, and
little later at ten cents again. and the takers
were as shy as when they refused the per-
suasions of the brass band.
But there is still room for wonder that
investors did not forget the valueless char
acter of most of the land grant, in consider
alton of the Federal bond subsidy of S27.-
S55,6S0. But this wonder evaporates when
tlnanciers recall the fact that when these
bonds were issued Federal bonds were not
then was greater than the highest premium
they have borne since. The S27 ,S55. $50 in
bonds loaned to the Central Pacific realized
for that corporation $50, 1876, COG in cash. q
discount of s., 120,073.
But the Central Pacific has to paw the
Government interest on the face of the
bonds and we may well conceive it posi-
BILE that the sharp capitalists of California
were aware that the interest on the dis
count, on the sum that the road did not
get, would at the maturity of the bonds
equal sc, 900, 900, or nearly Us much as the
amount of cash it realized out of the whole
subsidy. Looking back at it, we must con-
TESS that the Government subsidy was more
OF delusion and a snare than it was ben
eht, and one must be very enthusiastic by
nature to admire the finauciering which
sought to borrow Federal bonds at all under
such an enormous penalty
1t has often been said, and truly, that the
construction of the Pacific railways was a
war measure though both political parties.
IN their ante-bellum platforms of 1850, had
demanded that the Government should
substitute transcontinental road ANY
way, the work was done under the war de-
preston of securities and imitation of
prices. but when completed, its revenues.
out OF which the debt to the Government
must be paid, were reduced by the Govern
ment patronage of other transcontinental
roads, which left its first debtors TO skirm-
tsh with competition, and largely DESTROYED
its power TO meet its engagements. In ad-
dition to this, the Government, in its own
transportation of military and other
ASie,hts, has oAtSh pdiO CASH lrelSltS 10
roads that owed it nothing, instead of con-
timing its transportation to the debtor
roads.
This is a hasty sketch of the history of
the geatest transaction in finance and con-
struciion on the continent, and there is so
much in 1t to yindicate the judgment of the
capitalists who stayed out of il, that it will
serve to admonish and instruct the bust
ness world.
With this experience recorded and
known, we question much whether it
would be possible to-day, with the same
means, the same land and bond subsidy,
the same conditions of depression in Sc
eurities and imitation of prices. to find any
body who would undertake to duplicate
the work even under the high pressure of
hopeful enthusiasm and desperate courage
which is one of the Accomplishments q a
great war.
WHEN SHE CONES HOME.